The South America Cattle Report for January 18, 2017

By Patrick Archer and Eduardo Blasina

MONTEVIDEO In this week’s South America Cattle Report, Uruguay waits for a green light from the U.S, Brazil beef exports top $5 billion, Argentina gains market entry in the Philippines, and Paraguay is branded “a new South American meat empire.”

Uruguay Cattle Market Prices

The Uruguay fat cattle market has found some equilibrium after a period of diminished activity from December 20 through January 6. In contrast, the last ten days have created a better environment for local producers with average prices showing some life after falling in the second half of December.

Closing out the second week of January and now halfway through the third, we are at a moment of stability with meatpackers buying aggressively and supply lines at most plants shortening to between seven and ten days, although some plants are better stocked with supplies stretching up to fifteen days.

Kosher inspection teams consulted by Blasina & Associates are working full-tilt in local meatpackers, and this week there is even a kosher team from the United States working at the Sarubi plant. Kosher demand remains firm and looks to remain that way through the end of March or early April.

The average steer price in Uruguay is down five cents compared to last week, and the majority of deals are closing this week around US$2.90 per kilo on-the-hook, although some sellers are getting closer to US$2.95 for well finished animals close to the plants.

Similar to the machos, the average price paid for heifers is also a nickel below last week. The average price for heifers is now closer to US$2.60 per kilo with heavy animals fetching as high as US$2.65 per kilo and even a few cents more for animals over 230 kilos (500 lbs). As mentioned, supply lines at most plants nationwide are lasting seven to ten days on average.

In their weekly report, the Uruguay Cattle Brokers Association (ACG) confirmed the modest dip in average prices. The ACG lowered its average price for steers to US$2.95 per kilo, which is three cents lower than one week ago. The ACG also lowered the average price for heifers to US$2.65 per kilo compared to US$2.76 per kilo just last week.

Uruguay Weekly Slaughter Activity

With the holidays behind us, weekly cattle slaughter is starting to get back to normal levels even with one plant, Canelones, not operating. Total cattle slaughter rose last week to 44,328 head, which is 22% higher than a week ago and 10% higher than the same week in 2016.

There was a big bounce in steer slaughter last week to 19,653 head, a 27% increase over last week and 16% more than the same week last year. For the fourth consecutive week, heifers accounted for more than 50% of the total slaughter with 23,496 head or 53.1% of the weekly total.

Weekly cattle slaughter activity by plant was led by Frigorifico Tacuarembó with 3,719 head followed by Breeders & Packers Uruguay (BPU) with 3,574 animals and PUL with 3,080 head. San Jacinto was the plant handling the most steers (1,719), while Tacuarembó handled the most heifers (2,610).

Weekly sheep slaughter rose 11% to 21,562 animals, or 17% more than the same week last year. Las Piedras was the Uruguay plant processing the most sheep (10,546) followed by San Jacinto (5,708) and Chiadel (1,925) rounding out the top three.

Uruguay Meat Export Prices

For the week ended January 6, the National Meat Institute (INAC) weekly reference price for Uruguay beef exports fell US$145 to US$3,317 per ton. The average price of Uruguay beef exports is 4.2% below the previous week and 0.1% below the same week in 2016.

For the same week, the National Meat Institute (INAC) weekly reference price for Uruguay sheepmeat exports rose 17% to US$4,928 per ton. The average price of Uruguay sheepmeat exports is 22% higher than the same week last year. (Blasina & Associates)

Brazil Beef Exports Top US$5.5 Billion in 2016

Brazil finished 2016 with beef exports valued at US$5.5 billion, according to a new report published on BeefPoint. The county shipped 1.4 million tons of beef between January and December which was 1% more than 2015 in terms of beef export volume and 7% more in terms of beef export revenue.

Hong Kong was once again the #1 destination for Brazil beef exports in 2016 accounting for over 330 thousand tons valued at US$1.145 billion. The European Union ranked second with 117 thousand tons valued at US$739 million, and China rounded out the top three export destinations with 165 thousand tons valued at US$706 million. Brazil fresh beef (in natura) accounted for US$4.35 billion or 78% of the country’s US$5.5 billion in beef sector exports in 2016.

For 2017, the Brazilian Association of Meat Industry Exporters (ABIEC) is forecasting an even stronger year in terms of both beef export volume and revenue. New markets will be the focus for ABIEC this year including South Korea, Taiwan, Indonesia, Canada, Mexico and Japan. “The US and Europe will also be at the center of attention as we expand our market presence,” says ABIEC president Antônio Jorge Camardelli. (BeefPoint)

The Philippines Open Market To Argentina Beef

This week the Philippines opened its market to frozen cuts of beef with and without bones from Argentina, according to a report this week in SuperCampo.

“This new market for (Argentina) beef exports, which is added to the 22 destinations we managed to open last year for 40 agricultural products, is the result of close collaboration between the state and the private sector,” said SENASA president Jorge Dillon.

“We are beginning to position ourselves as beef providers for Southeast Asia, after having already gained access to Vietnam and Singapore. Little by little, Argentina is recovering ground in the international meat market and gaining access to non-traditional markets,” said Minister of Agroindustry Ricardo Buryaile.

According to data from the United Nation’s COMTRADE, the Philippines typically imports around 100,000 tons of beef worth US$340 million, and the main suppliers have been India, Australia, the United States, Brazil, Ireland and New Zealand. (SuperCampo)

Paraguay: The New South American Meat Empire

That is the headline of a very interesting article in Spain’s El País highlighting the emerging role of Paraguay on the international stage.

“In the past decade, Paraguay has moved up to become the world’s #6 exporter of beef cattle, and Paraguay is now competing with cattle powers like Australia, India, the United States and New Zealand,” writes El País’ Santi Carneri in his opening paragraph alongside a photo of a beautiful, blue-ribbon Brangus Grand Champion named “El Chema.”

Korni Paus, president of the Paraguay Meat Chamber, gave a year-end toast to the country’s meatpackers which have clearly rebounded from a 2008 bout with foot-and-mouth disease. Today the country has 14.2 million head of cattle, more than twice the number or residents, and investment in genetics among big beef producers has developed breeds very adaptable to the local climate.

Carlos Pedretti, president of the Meat Commission of the Paraguay Rural Association (ARP) points to the country’s recent success in exporting cattle the adapted well to the climate and soils of Ecuador. “It was very important, because it demonstrated that we don’t just export meat. We are also beginning to export genetics, which is value added.” (El País)

Uruguay Waiting for U.S. Green Light for Bone-In Sheepmeat

A new administration takes office in Washington this Friday, but that is not expected to impact the anticipated approval of Uruguay bone-in sheepmeat exports to the United States.

In a radio interview with Ricardo Sosa, SUL analyst Jorge Bonino said: “If there are no political hurdles, we have high expectations. We have the good fortune that the sanitary inspection officials who have been following the process and performed the risk analysis will continue in their positions under the new administration. We are just waiting for the authorization to begin entering and exploring the market,” said Bonino.

In related export news, Bonino said both public and private institutions are working to establish a new department to oversee the export of Uruguay cattle genetics abroad, specifically semen and embryos. The location of the facility has already been determined and the process of selecting animals for the program will begin shortly. The full interview from Radio Rural 610 can be heard below.

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